US: Concern builds over new game laws

Major publisher figureheads such as EA’s John Riccitiello, Sony’s Jack Tretton, Take Two’s Strauss Zelnick and Dinsey Interactive’ Graham Hopper have expressed their concern that the potential introduction of new laws controlling the sale of video games could have a major impact on the sector’s viability in North America.

Unlike in the UK where mature games are covered by the same retail law as violent movies, in the US there is no legislation controlling the sale of video games. It has always been claimed until now that any controls would be unconstitutional and contravene the First Amendment, which guarantees the right to free speech.

Instead, the industry relies on a voluntary code of conduct to control the sale of violent or explicit games to kids. The practice, however, does remain legal.

“It’s very, very surprising that the Supreme Court is hearing the case,” Take Two CEO Strauss Zelnick told CNBC. “I’m worried about it, and I think everybody in our business should be really worried about it.”

If new laws are passed then individual states would be free to determine what sort of content retailers are or are not able to sell. The potential result could be disastrous for publishers and could even end up with them having to produce several different versions of any given title to ensure that it gets onto all US retailer’s shelves.

It could also lead to major retailers such as Wal-Mart refusing to stock some titles altogether – a move that could have a disastrous effect on sell-through levels.

“One of America’s great exports is entertainment,” EA CEO John Riccitiello outlined. “The implication of Schwarzenegger vs ESA is we could end up with state level bureaucracies that define what’s marketable in 50 different jurisdictions across the US. I can’t imagine the government trying to tell Steven Spielberg ‘we need 50 different cuts of your movie for each state’. It will screw us up in a real way.”

Disney Interactive Studios’ executive VP and general manager Graham Hopper added: “It’s not about having a dramatic impact on our bottom line. It’s going to make our retailing abilities a nightmare.”

On a unit basis M-rated games constituted 17.4 per cent of all US game sales in 2009. Financially they likely occupied a higher percentage. More worryingly, publishers such as Take Two are heavily reliant on M-rated games, and some of the industry’s biggest sellers – such as Activision’s record-breaking Call of Duty: Modern Warfare 2 – are the backbone of its current success.

“We believe as an industry that the primary reason the Supreme Court is hearing it is despite the fact that this law has been struck down, the issue has come up 12 times previously,” SCEA’s president and CEO Jack Tretton stated. “I think the Supreme Court is looking at it to potentially see if there’s something to it or to put an end to it once and for all.”

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